On Thursday, CNBC provided an update regarding plans to introduce a bill legalizing marijuana.
Writing about Jeffrey Miron, senior lecturer in economics at Harvard University and a senior fellow at the Cato Institute, CNBC states:
"Miron estimates that the US would be around $88 billion a year better off if drugs were legalized, with $41.3 billion saved on enforcement of drug-related laws and $46.7 billion garnered in tax revenues."
I was incredulous that a senior fellow at the Cato Institute would actually make such an absurd claim!
So I double-checked the original source. CNBC's claim is accurate!Here's where Miron errs:
If legalization generates $46.7 billion in annual tax revenues, how could the US become $46.7 billion "better off"?
I'm sure that much, if not most, of those marijuana purchases would be made by Americans. Therefore, when these people pay tax on the purchases, they simply shift money from themselves to the government. Therefore, America is no richer overall! The money stays within America!
Similarly, if the cost of US law enforcement is reduced by $41.3 billion, America is not likely to become much, if at all, richer! Although government costs would decrease, that would be partially offset by the loss of income by Americans who lost their job in law enforcement due to budget cuts!
Now, I'm not claiming that it isn't beneficial to legalize marijuana. I actually think it's likely that legalization would be very beneficial to the USA!
But if one wants to get into the economics of the matter, the logical framework must be there!